For a growing number of families in metro Denver, buying a new home is slipping out of reach. But more buyers and builders are pursuing townhomes as a way to keep costs attainable.
“Demand remains very strong for housing, but the supply remains constrained. It continues to push prices higher,” said John Covert, director of Metrostudy’s Colorado region. “That’s one of the reasons why more attached product is getting built.”
Unlike detached homes, which stand alone, attached homes share walls. The category includes condominiums, townhomes, duplexes and paired homes. Because more units can be put on the same amount of land, attached homes usually are more economical to build.
Nearly three in 10 of the new homes hitting the market are attached, up from a low of 15.8 percent of the mix in 2012. Attached homes now hold the highest share of new-home activity since 2008, Covert said. What makes the comeback of attached housing noteworthy is that townhomes single-handedly are driving the surge, with a minimal assist from condos.
Condos historically have represented about 11.7 percent of all new-home activity in metro Denver, but they were only 4 percent during the past year. Developers blame that on heavy litigation over construction defects in Colorado, which they say has driven up insurance premiums and deterred projects.
A state law that took effect in May is aimed at reigniting condo construction. It requires a majority of a complex’s unit owners — rather than just its homeowners association board — to consent to legal action against a developer for poor construction.
Most of the new condos going up in metro Denver are luxury, with half carrying a price tag of $700,000 or more, according to Metrostudy. That contradicts the role condos used to play in the market as a lower-cost housing option popular with first-time buyers.
Townhomes have stepped into the gap. Over the past year, about six in 10 of every new home that was started in metro Denver carried a price tag between $400,000 and $600,000. A record low 28 percent were priced under $400,000, the new definition of “attainable,” according to Metrostudy.